Audits of 401(k) Plans

Chapter 7 THE AUDITOR'S REPORT AND FINANCIAL STATEMENT DISCLOSURES

LEARNING OBJECTIVE

After completing this chapter, you should be able to do the following:

•     Identify the paragraphs to include in the auditor's reports for various situations encountered in audits of 401(k) plans.

•     Indicate the appropriate note disclosures for the financial statements of 401(k) plans.

AICPA AUDITING STANDARDS BOARD PROPOSES SIGNIFICANT CHANGES TO EBP AUDITOR REPORTING

In April 2017, in an effort to improve the communicative value and relevance of the auditor's report, the AICPA Auditing Standards Board (ASB) released an exposure draft of a proposed Statement on Auditing Standards (SAS), Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA (Exposure Draft). During its deliberations, the ASB considered ways audit quality may be enhanced by a redesigned auditor reporting model for audits of ERISA plan financial statements, taking into consideration the specialized nature of plan operations. The proposed SAS reflects the ASB's proposal for a new reporting model for audits of ERISA plans that, among other things, changes the form and content of the auditors' report on an EBP audit and prescribes certain new performance requirements.

The proposed SAS would apply to audits of single employer, multiple employer, and multiemployer plans subject to ERISA. In summary, the proposed standard includes:

•     New engagement acceptance requirements. ...